As successful speculative traders in just about any asset class would support, the importance of charting and technical analysis is tough to overstate. In short-term trading especially, the ability to bring up and interpret crucial data on a given asset is integral to deciphering its future movement.
Most binary options brokers do provide a few limited charting options. They are typically simple line charts that give traders a general idea of past price movement. When looking for specific chart patterns, however, they might fall short of advanced traders’ expectations.
To decide on charting options for binary options, one must first understand the concept of charting itself. There is actually more than one way to create a line chart for the price of an asset. The basic line chart is the simplest, with points being plotted at every given unit of time – which can be anywhere from a minute to a decade depending on the chart. Bar and candlestick charts, meanwhile, display more information about the actual price of the asset. Instead of plotted points, there is a vertical bar for each unit of time. All the bars are charted one-after-another to create the line itself. Nodes on the bars indicate where the price was at the open and close of that time unit. Colors are used to indicate whether that time period was positive (green) or negative (red) in the period.
Modern charting also involves certain popular tools for technical analysis. Traders can draw lines (for support, resistance, or a Fibonacci retracement) and use mathematical tools such as a moving average indicator or stochastic indicator to help decide whether an asset is overbought or oversold.
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Of course, traders spend years learning the ins and outs of charting and analysis. What’s important to new investors is whether or not these tools are available for binary options. Fortunately, that answer is yes. While charting software isn’t found through some brokers, it is in fact available for every single trade one could make. The reason is that all binary options trades are based on real assets in real time. Consequently, any up-to-date charting software can be used to track the asset that a trader’s contract is based on.
Finding high quality charting software isn’t particularly difficult, either. The use of a search engine will reveal a number of free alternatives that are continually updated and have all the tools one could need for binary options charting.